The eurozone crisis has created a “great black cloud of uncertainty” Sir Mervyn King warned, as Germany’s Constitutional Court threatened to derail plans designed to take the region forward.
The Governor of the Bank of England said that businesses all over the world would hold back from investment and spending “until they know how [the eurozone crisis] is going to be resolved.”
A resolution of the crisis looked ever distant after fears mounted that the German court would delay approval of the eurozone’s permanent rescue fund, the European Stability Mechanism, which was supposed to be operational on July 1.
Earlier, finance ministers meeting in Brussels promised Spain a €30bn (£24bn) cash injection within days to save its banks, and confirmed they had extended the deadline for Spain to cut its deficit to the 3pc target by one year to 2014.
Speaking during an official visit to his home City of Wolverhampton, Sir Mervyn said the eurozone’s woes continued to weigh on the UK economy.
“The economy has been flat for two years and doesn’t show a great deal of signs of impending recovery. We’ve had the longest squeeze in real take home pay for households since the 1920s.”
Sir Mervyn would not be drawn on the Barclays Libor scandal, or his meeting with the Barclays chairman Marcus Agius, in which he is thought to have signalled the bank’s chief executive Bob Diamond must go.
The governor suggested he would like banking reform to go further than the ring-fencing proposed by the Vickers commission, favouring a “complete separation” of banks’ retail and investment banking businesses.
He told BBC Radio 4 that given Vickers “is the game in town we have”, and urged the government to legislate as soon as possible to “prevent further lobbying ... to water down the proposals”.
telegraph.co.uk
The Governor of the Bank of England said that businesses all over the world would hold back from investment and spending “until they know how [the eurozone crisis] is going to be resolved.”
A resolution of the crisis looked ever distant after fears mounted that the German court would delay approval of the eurozone’s permanent rescue fund, the European Stability Mechanism, which was supposed to be operational on July 1.
Earlier, finance ministers meeting in Brussels promised Spain a €30bn (£24bn) cash injection within days to save its banks, and confirmed they had extended the deadline for Spain to cut its deficit to the 3pc target by one year to 2014.
Speaking during an official visit to his home City of Wolverhampton, Sir Mervyn said the eurozone’s woes continued to weigh on the UK economy.
“The economy has been flat for two years and doesn’t show a great deal of signs of impending recovery. We’ve had the longest squeeze in real take home pay for households since the 1920s.”
Sir Mervyn would not be drawn on the Barclays Libor scandal, or his meeting with the Barclays chairman Marcus Agius, in which he is thought to have signalled the bank’s chief executive Bob Diamond must go.
The governor suggested he would like banking reform to go further than the ring-fencing proposed by the Vickers commission, favouring a “complete separation” of banks’ retail and investment banking businesses.
He told BBC Radio 4 that given Vickers “is the game in town we have”, and urged the government to legislate as soon as possible to “prevent further lobbying ... to water down the proposals”.
telegraph.co.uk
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